July 4-10, 2008 Vol. 29, No. 11
Bellevue patent-buying firm hires for growth in Asia
by Eric Engleman
Staff Writer
Intellectual Ventures LLC, the Bellevue patent-holding firm founded by former Microsoft
chief technology officer Nathan Myhrvold, is
rapidly bulking up its staff and preparing for a
major expansion in Asia.
The firm has added 150 people in a variety of
disciplines since last fall, bringing its total head
count to about 350. This spring, it hired Patrick
Ennis, a prominent venture capitalist from Arch
Venture Partners in Seattle, to help manage the
firm’s global expansion, including the opening
of five new offices in Asia this fall.
Myhrvold said his firm is eager to connect
with inventors outside the U.S.
“The region of the world we chose to do our
first major expansion and do it all in one go is
Asia,” he said in a brief telephone interview.
“Over time, there’s no reason we shouldn’t do
this in other parts of the world.”
The moves are part of a new growth phase for
Intellectual Ventures, which has quietly amassed
a vast store of technology patents since being
founded in 2000 by Myhrvold and Edward Jung,
former chief architect at Microsoft.
The firm appears to be raising new money
from investors. A fund called Invention Development Fund I LLC, which gives an address and
phone number for Intellectual Ventures, raised
$355 million, and is seeking up to $1 billion,
according to an August regulatory filing in the
state of California.
Myhrvold declined to comment on any fundraising efforts, but said: “Our business goal is to
expand internationally. It costs money to expand
in five countries.”
Intellectual Ventures has built its patent war
chest by buying up technology patents from
companies, universities and individuals, and
generating patent applications through in-house
brainstorming sessions. The firm says it holds
thousands of patents but won’t specify the exact
number.
The firm makes money from licensing patents
to companies. But its business model has also
sparked fears that it will someday use lawsuits
to pressure companies to pay for the use of its
intellectual property.
Ennis makes a noteworthy addition to the
Intellectual
Ventures
team. Ennis, who has
a doctorate in physics
from Yale, was until recently a managing director at Arch Venture PartEnnis
ners in Seattle, where he
nurtured startups coming out of universities and
national laboratories.
He joined Intellectual Ventures in March as
global head of technology, and is heavily involved in the firm’s international expansion
efforts. The firm plans to launch offices in five
Asian countries this fall: China, India, Japan,
South Korea and Singapore.
Intellectual Ventures says it is actively recruiting technology analysts, patent licensing executives, business development people, legal staff,
and nuclear reactor experts (the firm is exploring new types of nuclear reactor technology as
part of an in-house energy invention effort). The
firm opened an office in Austin, Texas, in March
and also recently expanded its Silicon Valley office in California to about a dozen people.
Myhrvold, who left Microsoft in 2000 after
a 14-year career, said many of Intellectual Ventures’ technology patents fall into the areas of
computer hardware and software, communications and networking, and consumer electronics.
The firm has filed 1,240 patent applications of
its own, though just 40 have been approved so
far (the process can take years).
Intellectual Ventures’ large patent portfolio
has raised concerns that it may one day join the
ranks of “patent trolls,”
firms that collect patents
solely to file infringement claims against companies. Underscoring the
technology
industry’s
fear of patent lawsuits,
a number of big technolMyhrvold
ogy companies recently
formed a group to buy
up patents in order to fend off such lawsuits, according to a report in the Wall Street Journal.
Google Inc., Verizon Communications Inc., and
Hewlett-Packard Co. are members of the group,
called Allied Security Trust, the report said.
Myhrvold said his firm’s strategy is to “sell
our products to customers without resorting to
litigation,” though he didn’t entirely rule out
lawsuits.
“It would be really stupid for me to say I’m
not going to defend my IP (intellectual property)
rights,” he said.
But, Myhrvold added: “Litigation is an incredibly risky and time-consuming and for all
those reasons it’s a stupid way to resolve a dispute. Sometimes in life you don’t get to choose
but if you can possibly avoid it, you want to
avoid it.”
Myhrvold declined to comment on investors in Intellectual Ventures. But he said the
firm counts university endowments and pension funds among its investors, and also has a
number of “strategic limited partners” that are
investors as well as customers of Intellectual
Ventures’ patent portfolio.
Ron Epstein, CEO of IPotential LLC, a patent
brokerage in Silicon Valley, and former director of licensing for chip giant Intel Corp., said it
makes sense that Intellectual Ventures is turning
its attention to the global patent market.
“Bottom line is that there are lots of inventors
across the entire world that are coming up with
inventions that are broadly relevant to the markets they’re operating in,” Epstein said.
George Rondeau, a partner at the Seattle office of Davis Wright Tremaine LLP, said his law
firm has lost two patent attorneys to Intellectual
Ventures in the past couple months. One of the
attorneys, Melanie Haindfield, who has a specialty in biotechnology, left a few weeks ago,
and another attorney, whom Rondeau declined
to name, is slated to leave in a few weeks. But
Rondeau said he didn’t begrudge his colleagues
jumping ship.
“The whole structure of the company and
mode of operation is so unique for the patent
field, it’s frankly interesting and intriguing. Being a part of it is attractive to some people,” Rondeau said. “It’s a grand experiment and it could
radically change a segment of the industry.”
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Reprinted for web use with permission from the Puget Sound Business Journal. ©2008, all rights reserved. Reprinted by Scoop ReprintSource 1-800-767-3263.